Ford faces challenges with high warranty expenses, insufficient cost-cutting measures
Date
10/29/2024 5:46:19 AM
(MENAFN) Ford Motor Co. is facing challenges with stubbornly high warranty expenses and insufficient cost-cutting measures, which have negatively impacted its profits this year. As a result, the company has lowered its full-year earnings guidance, leading to a 6 percent drop in its stock price in after-hours trading following the release of its third-quarter earnings report.
The automaker, based in Dearborn, Michigan, reported a nearly 26 percent decline in net profit, taking a USD1 billion accounting charge to write down assets related to a canceled three-row electric SUV. Ford's net profit for the third quarter was USD892 million, down from USD1.2 billion during the same period last year.
However, when excluding these one-time charges, Ford reported an adjusted pretax profit of USD2.6 billion, or 49 cents per share, which surpassed analyst expectations of 46 cents, according to FactSet. Additionally, the company's revenue rose by 5.5 percent to USD46.2 billion, also exceeding Wall Street forecasts.
In response to the financial setbacks, Ford has revised its full-year pretax income guidance down to USD10 billion, aligning with the lower end of its previous forecast of USD10 billion to USD12 billion made at the end of the second quarter, causing concern among investors. CEO Jim Farley acknowledged the impact of high warranty costs on earnings but indicated that addressing these issues could lead to significant financial benefits for investors in the future.
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